The influence of leadership styles on small medium enterprise survival in the manufacturing sector within Msunduzi Municipality

Abstract

Small and medium enterprises (SMEs) are key contributors to the South African economy. In order to survive the current volatile economy, SME leaders need to implement leadership styles that are good for the survival of businesses in the manufacturing sector. The manufacturing sector in South Africa is growing at a slower pace in comparison to other sectors due to high labour and production costs. However, implementing a management system, such as, suitable leadership style creates the competitive advantage necessary for survival.

The aim of the study was to identify the leadership styles used by SMEs in the manufacturing sector within Msunduzi Municipality and to determine the effectiveness of leadership styles on enterprise success and survival. Managers and other people in authority in organisations adopt certain leadership styles in order to communicate with their subordinates with regard to the execution of tasks. Adopting unsuitable leadership styles impacts negatively on business performance. The study was conducted at SMEs in the manufacturing sector within the Msunduzi Municipality in Pietermaritzburg, Kwa-Zulu Natal. This project emphasised the context of leaders of SMEs and the amount of influence or non-influence that leadership has on the survival of the business.

A quantitative research design was adopted for the study; a structured closed-ended questionnaire based on the Multifactor Leadership Questionnaire (MLQ) developed by Avolio, and Bass (2004) was used to collect data from the sample respondents. The target population comprised 686 SMEs. A random sampling technique was used and a sample size of 200 was drawn. A response rate of 68% was successfully achieved. The researcher used personal and email methods of data collection. The data collected from the sample respondents were captured on Microsoft Excel and analysed using the Statistical Package for Social Sciences (SPSS) version 25.0. Several hypotheses were formulated and tested using the Pearson’s Chi-Square.

Results revealed that applying a transformational leadership style in managing a business tends to increase the length of business survival. The opposite is true regarding the laissez-faire leadership style. The study further revealed that there is no

evidence to suggest that a transactional leadership style has any effect on the survival length of SMEs in the manufacturing sector. Tentative recommendations suggest that leadership in SMEs should adopt a leadership style that is best for the survival of the business.